Small business impacts?
Posted in RESPA reform By Matt Carter, Monday, May 19, 2008.The House Small Business Committee will hold a hearing on "RESPA and its Impact on Small Business" 10 a.m. Thursday May 22.
Committee Chairwoman Nydia Velázquez, D-N.Y., was not a fan of HUD's last RESPA reform proposal.
From her March 11, 2003 statement:
"...by providing incentives for volume discounting of settlement services, HUD is creating an environment that encourages big banks to contract with large service providers, driving small businesses onto the sidelines - and out of business. Once again, this scenario puts the interests of corporate America over those of Main Street.
...
"HUD's economic analysis of its proposal was insufficient because it broadly grouped together all small businesses instead of undertaking a more detailed sector-by-sector analysis. HUD also appears to have underestimated how heavily the burdens of this rule would weigh on small business.
"In addition, HUD failed to examine alternatives that would minimize the impact on small businesses, estimated at $3.5 billion for compliance alone. If HUD were unable to come up with alternatives because none exist, that would be one thing. But virtually every industry player came up with alternatives that made the process easier for consumers, while not overburdening small businesses.
"Everyone in this room agrees that RESPA is in need of an overhaul. And from what I've heard, everyone agrees that this rule is not the answer. HUD set out to improve customer protections and make the process of shopping for a mortgage simpler, yet consumer advocates would argue that this rule fails to do this. Even worse, this rule harms small businesses while introducing uncertainty into an already volatile market."
You must login or register to post a comment.
Submitted by Diane Cipa on May 23, 2008 - 7:46pm.
I listened to some of yesterday's testimony on RESPA in the House Small Business Committee hearing.
I've read many of the public comments posted on RESPA.
Here are a few random thoughts......
Hold in your hand a closed mortgage loan file. Measure its depth and tell me how many of those forms are required by HUD or even the federal government? Some, but not many. Most of the forms and disclosures I see in files have been designed by mortgage lenders to either secure their interests, cover their concerns over law suits, route to various and sundry departments for servicing or other needs, instructions to settlement agents, etc. then we have the group of disclosures created by title companies and settlement agents to cover their various housekeeping and legal concerns. And, of course, don't forget the voluminous sales agreement and agency disclosures and multi-list disclosures.
Mortgage lenders, title companies and real estate brokers never hesitate to subject the consumer to another form if it suits their fancy. It's a cost of doing business.
Mortgage lenders, title companies and real estate brokers never hesitate to create software to support new procedures or forms if it suits their fancy. It's a cost of doing business.
Mortgage lenders, title companies and real estate brokers never hesitate to seek legal counsel and pay attorneys if it suits their fancy. It's a cost of doing business.
Mortgage lenders, title companies and real estate brokers never hesitate to create training seminars to cover new forms and procedures if it suits their fancy. In fact, there's a whole cottage industry that thrives on maintaining a constant environment of change just so they can sell tickets to seminars and summits. It's a cost of doing business.
Mortgage lenders, title companies and real estate brokers never hesitate to subject appraisers and settlement agents to procedural changes and documentation changes which cost money and time and training if it suits their fancy. It's a cost of doing business.
Mortgage lenders, title companies and real estate brokers didn't hesitate to pay many thousands of dollars in illegal kickbacks, gifts, etc. as documented in the ridiculous number of lawsuits, settlements, and regulatory actions of these last two or three years if it suits their fancy. It was a cost of doing business.
Mortgage lenders, title companies and real estate brokers never hesitate to spend millions to create super automated systems that replace human underwriters, appraisers, and title examiners if it suits their fancy. It's a cost of doing business.
Mortgage lenders, title companies and real estate brokers never hesitate to create affiliations which shut out independent small business owners if it suits their fancy. It's a cost of doing business.
The consumer is alone. Not a one, but HUD, is trying to find a better way to comparison shop.
These "folks" just don't want anybody to monkey around with the referral net.
They want to control the point of sale.
They do not want to empower the consumer.
They do not want the consumer to have information.
The freedom consumers are enjoying in some of the new real estate shopping platforms is the new world.
Perhaps we need not depend upon HUD for consumer relief. Politicians tied to old school back room deals will likely put the kabash on the HUD effort.
Consumers have power even if HUD can't help.
Consumers can and will demand access to information.
In my market I am there, giving it freely and will continue to do so.
Like minded title agents and other providers, let's create our own free platforms and little bits of freedom here on the internet.
For now we have free speech. Let's use it.
Consumers have the power.
Submitted by Bruce Hahn on May 23, 2008 - 8:04pm.
American Homeowners Grassroots Alliance
Diane-
It is very, very, very refreshing to hear such pro-consumer sentiments from a real estate professional. We try to make our voice heard (the Center for Responsible Lending made some thoughtful suggestions at the hearing), but the consumers' voice is often overwhelmed by the power of moneyed interests.
Keep up your advocacy for consumer interests!
Best regards,
Bruce Hahn
President
American Homeowners Grassroots Alliance
Serving the interests of the nation's 75 million homeowners and future homeowners since 1984.
The American Homeowners Grassroots Alliance is a nonpartisan consumer advocacy organization dedicated to assisting the nation's 75 million homeowners understand significant policy issues affecting homeowners and homeownership, and empowering homeowners to make their voices heard by state and federal officials.
Visit our web site http://www.americanhomeowners.org. Contact us at: 6776 Little Falls Road, Arlington, VA 22213-1213. Direct Dial: 571-214-1013; Headquarters: 703-536-7776
Submitted by Diane Cipa on May 23, 2008 - 8:12pm.
Thank you, Bruce.